cadbury's formal defense against kraft

8/14/2019 Cadbury's Formal Defense Against Kraft

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Reject Krafts offer

performance,Higher

valueHigher


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This document includes the Appendices. Unless otherwise stated, the words

and phrases used in this document shall have the meanings given to them in

the Appendices.

If you are in any doubt about the contents of this document or the action

you should take, you should seek your own financial advice immediately from

your stockbroker, bank manager, solicitor, accountant or other independent

financial adviser authorised under the Financial Services and Markets Act

2000, if you are in the United Kingdom, or, if you are outside the United

Kingdom, from an appropriately authorised independent financial adviser.

This document is not for release, publication or distribution in, into or from

any jurisdiction where such release, publication or distribution would

constitute a violation of the securities laws of such jurisdiction (each

a Restricted Jurisdiction).

If you have sold or otherwise transferred all of your Cadbury Shares, pleasesend this document as soon as possible to the purchaser or transferee, or tothe stockbroker, bank or other agent through whom the sale or transfer waseffected, for transmission to the purchaser or transferee. However, thisdocument must not be forwarded or transmitted in or into any jurisdictionwhere to do so would constitute a violation of the relevant laws of thatjurisdiction. The distribution of this document in or into jurisdictions otherthan the United Kingdom may be restricted by law and therefore persons intowhose possession this document comes should inform themselves about andobserve such restrictions. If you have sold or transferred only some of your

Cadbury Shares, please retain this document and contact your stockbroker,bank or other agent through whom the sale or transfer was effected.

A copy of this document is available free of charge, subject to certainrestrictions relating to persons in Restricted Jurisdictions, on Cadburys websiteat www.cadbury.com, and will continue to be available for so long as the Offerremains open for acceptances.

Each of Goldman Sachs International, Morgan Stanley & Co. Limitedand UBS Limited is acting exclusively for Cadbury and for no-one else inconnection with the matters referred to in this document and will not beresponsible to anyone other than Cadbury for providing the protectionsafforded to their respective clients or for providing advice in relation tosuch matters.

This document has been prepared in accordance with the requirements ofthe City Code and is subject to disclosure and procedural requirements thatare different from those under US law. Any financial figures included orincorporated in this document may have been prepared in accordance withnon-US accounting standards that may not be comparable to the financialstatements of a US company.

Except for historical information and discussions contained herein, statementscontained in this document may constitute forward looking statements,including within the meaning of Section 27A of the US Securities Act of1933, as amended, and Section 21E of the US Securities Exchange Act of1934, as amended. Forward looking statements are generally identifiable bythe fact that they do not relate only to historical or current facts or by the useof the words may, will, should, plan, expect, anticipate, estimate,believe, intend, project, goal or target or the negative of thesewords or other variations on these words or comparable terminology.Forward looking statements involve a number of known and unknown risks,

uncertainties and other factors that could cause Cadburys or its industrysactual results, levels of activity, performance or achievements to be materiallydifferent from any future results, levels of activity, performance orachievements expressed or implied by such forward looking statements. Theseforward looking statements are based on numerous assumptions regardingthe present and future strategies of each business within the Cadbury Groupand the environment in which they will operate in the future. Cadbury doesnot undertake publicly to update or revise any forward looking statement thatmay be made in these materials, whether as a result of new information,future events or otherwise.All subsequent oral or written forward lookingstatements attributable to Cadbury or any person acting on behalf of Cadburyare expressly qualified in their entirety by the cautionary statements above.

In evaluating forward looking statements, you should consider generaleconomic conditions in the markets in which Cadbury operates, as well asthe risk factors outlined in Cadburys most recent Form 20-F filed with the

US Securities and Exchange Commission (the SEC) and posted on Cadburyswebsite at www.cadbury.com. This document should also be viewed inconjunction with Cadburys periodic half yearly and annual reports and otherfilings filed with or furnished to the SEC, copies of which are available fromCadbury plc, Cadbury House, Uxbridge Business Park, Sanderson Road,Uxbridge UB8 1DH, United Kingdom and from the SECs website atwww.sec.gov.

In response to the Offer, Cadbury has filed a Solicitation/RecommendationStatement on Schedule 14D-9 with the SEC. Holders of Cadbury Sharesand Cadbury ADSs are advised to read the Solicitation/RecommendationStatement on Schedule 14D-9 because it contains important information.Copies of the Schedule 14D-9 and other related documents filed by Cadburyare available free of charge on the SECs website at www.sec.gov. In addition,documents filed with the SEC by Cadbury may be obtained free of charge bycontacting Cadburys media or investor relations departments at CadburyHouse, Uxbridge Business Park, Sanderson Road, Uxbridge UB8 1DH, UnitedKingdom or on Cadburys website at www.cadbury.com.

Nothing in this document (other than the Profit Forecast) is intended

to be a profit forecast and no statement in this document should be

interpreted to mean that the earnings per Cadbury Share for the current orfuture financial periods will necessarily be greater than those for the relevant

preceding financial period.

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

In addition to this document, we have publishedan Investor Presentation. This presentation andthe recorded webcast are available online at:www.cadburyinvestors.com


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Reject Krafts Offer 1

rejectkraftsofferCadbury is a strong pure-playconfectionery business withiconic brands and excellentmarket positions

You own a unique andvaluable business whichcannot be recreated

We have transformedCadbury and are deliveringahead of our Vision intoAction plan

You have invested in thistransformation and areentitled to the full rewards

Krafts offer completely

misses the value we havealready created in Cadbury

Do not let Kraft steal

your company

We expect the next phase ofVision into Action to deliverimproved revenue growth,enhanced protability and

higher cash returns

We are committed todeliver signicant further

value for shareholders

Cadbury is delivering higherperformance and higher value

Do not complete any form of acceptance


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2 Reject Krafts Offer

Dear Shareholder

Thank you for taking the time to read this document carefully. It contains important information which we believe isof great significance to you. Kraft has made an offer which, at latest prices, values your company at only 726p per share.It is your Boards belief that this offer fundamentally undervalues Cadbury and this document explains why.

Your management team has built a business with exceptional growth opportunities

We have undertaken a transformation of your business, completing a number of major acquisitions and disposals as

well as the majority of our investment in a significant restructuring programme. As a result, Cadbury today is a uniquepure-play confectionery business with an outstanding portfolio of iconic brands, including the number one global brandsin block chocolate, gum and candy Cadbury Dairy Milk, Trident and Halls.

Cadbury has leading market share positions across the world in all three confectionery segments. We are the numberone confectionery company in the fast-growing emerging markets which account for nearly 40% of our revenues. Weare also the number one player in developed markets outside of the US. On the back of these strong positions and oursharp category focus we are well positioned to deliver growth ahead of the confectionery sector as a whole andcapture further market share.

Our Vision into Action plan has transformed Cadbury into a nancially stronger and more

competitive business

We announced our Vision into Action plan in June 2007, with the objective to strengthen the growth, profitability

and capabilities of our business. Vision into Action also set out ambitious and specific targets for revenue and margins.During the last two years, we have simplified our portfolio and de-layered our organisational structure. We have alsoinvested in state-of-the-art manufacturing and closed inefficient factories. Finally, we have strengthened our distributionin emerging markets and invested significantly in marketing and innovation.

As a result of these actions, your business has delivered well ahead of expectations. We will have delivered averageannual revenue growth of around 6 per cent and increased trading margin by over 350bps for the period 20072009,delivering an incremental 320m of trading profit*.

We believe that further value will be delivered to shareholders over the coming two years as the full benefits of theinvestments we have made into Vision into Action are realised. Although almost 80% of the 750m restructuringinvestment has been made, only 45% of the expected annual savings have been earned to date. The realisation ofannual savings is in line with our expectations, and the remainder are on target to be delivered by 2011.

Krafts offer fails to recognise the value we have built in your company

Kraft is only offering 11.6x Cadburys 2009 forecast EBITDA*. This is a very significant discount compared to the multiplesof comparable transactions in the sector. Applying the same multiple of achieved profits that was proposed by Wrigley forHershey (Cadburys closest peer in chocolate) or that was paid by Mars for Wrigley (Cadburys closest peer in gum) wouldimply a value for Cadbury substantially in excess of the value of the Kraft offer.

As you can see, Krafts offer completely fails to recognise the value we have built in your company and the level ofprofitability that has been achieved, never mind the strong growth we expect over the next few years.

Furthermore, the majority of the offer consideration comprises Krafts shares. This is unappealing and of uncertain value,as evidenced by the marked underperformance of its shares. Krafts latest share price of $27 is 14% below its 2001 IPOprice of $31, having significantly underperformed versus its peer group over the last eight years.

Cadbury plcCadbury House

Sanderson RoadUxbridge UB8 1DH

United Kingdom

Letter from the Chairman


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No. 1 global brands in all three confectionery categoriesWe hold the global number one positions in block chocolate, gum and candy. These three brands account for around a third>of our revenues

no.1 global brand

no.1global brand

no.1 global brand

Pure-play confectionery model with an outstanding brand portfolioCadburys business model is driven by our unique portfolio of strong local and regional brands, providing leading market share>

positions across the world in all three confectionery segments

Chocolate Gum Candy

Cadbury is a strong

pure-play confectionery businesswith iconic brands

46%of Cadbury revenue 33%of Cadbury revenue 21%of Cadbury revenue


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No. 1 in developed markets outside the United StatesWe hold leadership positions in our top five developed markets of UK, US, Australia, France and Canada.>These geographies account for nearly 80% of our developed markets revenue

%

Marketsh

are

Chocolate Gum Candy

United Kingdom

35% 9% 23%

United States of America

34% 10%

Australia

48% 20%

France

48% 21%

Canada

15% 45% 22%

= No. 1

= No. 2

and excellentmarket positionsNo. 1 in high growth emerging confectionery markets

We hold the global number one position in emerging confectionery markets these markets comprise around 40% of our revenues>Our unrivalled distribution capabilities continue to deliver above-market growth>

2004 2005 2 006 2 007 2008 2009E

South America Revenues

233m

485m

16%growthp

.a.*

2004 2005 200 6 2 007 2008 2009E

India Revenues

97m

240m

20%growth

p.a.*

200 4 20 05 2 006 2 007 2008 2009E

Southern Africa Revenues

100m

195m

14%growthp

.a.*

*Compound annual growth rate


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In June 2007, we announced our Vision into Action planThe key elements were:

Key achievements:

Driving growthin focus brands

8% annual growth in revenues from our top>

three global brands which represent onethird of our revenue

Strengthening our routeto market networksin emerging markets

2,000 new distribution routes added to our>Mexican business in 2008A further 1> 37,000 new outlets in India in thelast two years

Investing more

in marketing andinnovation

Almost trebled total spend on marketing>and R&D between 2002 and 2009

Innovation now accounts for 1> 4% of revenuesup from 6% in 2003

Simplifying ourorganisational structure

180bps improvement in> SG&A since 2007driven by delayering of the organisation

Investing in state ofthe art manufacturing

Around 200m spent to create centres>of excellence in Poland (gum and chocolate),Australasia (chocolate and candy) andBournville, UK (block chocolate)

Closing plants toimprove efficiency

15% reduction in the number of facilities>on track for 2011 we have announced theclosure of 5 plants to date

Since 2007, our Vision into

Action plan has created anexceptional platform for growth

transformedCadbury and are delivering ahead of plan

We have


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We have delivered against our targets

Target Achieved

4 6% organicrevenue growth

7% growth in 2008, with forecast growth for 2009 of around themiddle of our target range on a constant currency basis

Confectioneryshare gain

Further gains in 2008 and first half of 2009

Mid-teens tradingmargin by 2011

Forecast 2009 trading margin of 13.3%* around two thirdsof the improvement towards 2011 target has been delivered,despite being only half way through our plan

Strongdividend growth

Dividend grew by 6% in 2008 and 8% in H1 2009

Efficientbalance sheet

Forecast 2009E net debt/EBITDA* of approximately 1.5xand a BBB credit rating

Growth in ROIC ROIC increased 110bps in 2008 with further strong growth in 2009

Highlights of Vision into Action 20072009

Revenue +1.3bn Increased revenue by around 1.3bn since 2007

Margin

+350bps*Grew trading margin by 350bps since 2007

Prot +320m* Increased trading profit by around 320m since 2007

11.913.3*

2007(Base)

2008 2009E

9.810.6

12.1

0

50

100

2007 2008 2009E 2010E 2011E

Expected

Annual

Savings

Total

Investment 80%

45%

Our margin improvement is ahead of plan

Internal plan as at June 2007

Actual performance

Trading Margin %

To date, c.80% of our restructuring investment has been made butinvestors have received only c.45% of the expected annual savings, withthe remainder coming as planned by 2011

% of total planned

* This statement includes a 2009 prot forecast which has been reportedon for the purposes of the Takeover Code (See Appendix 2).


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Performancedriven

World class capabilities

> Our culture and values ensure we attract the best people and get the best outof them. We are developing world-class talent and capability across our business,especially in emerging markets

Our unique culture and values drive our performance

We know that doing good is good for business. Our uniqueculture and deep-seated values are part of our identity andintegral to our success. For 185 years Cadbury has built on

these strong principles to become a leader in both businessand in corporate responsibility. Today, more than ever, peoplewant to work for, do business with and buy from a companylike Cadbury.

Our values are at the heart of the way we work today andunderpin our future success.

passionate> colleagues determined to win and be the besta company> customers and suppliers want to do business withbrands, people and practices that> consumers love and respectconnected to our> communities and in touch with trendsupholding the highest corporate> governance standards

ExpertSpecialists in our sector,with deep insights and

experience.

AgileFast and focused, applyingsuccessful ideas across

markets to win.

CommittedEnergised colleagues,determined to deliver.


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Sustainable value from our values

> Our sustainability commitments are integrated into our business plan to create valueand competitive advantage, helping to strengthen our business, build our reputationand motivate our people

valuesled

Ethical sourcing Targeting 350> million Cadbury Dairy Milk bars to carryFairtrade, adding value to the brand and the consumer100 farming communities active in the Cadbury Cocoa>Partnership adding value to our supply chain

Environment > Targeting 10% reduction in absolute carbon emissions by 2011> c.20% water reduction since 2006Award-winning eco packaging launched for key seasonal>and gifting lines

Responsibleconsumption97% of our portfolio carries nutritional labelling> 40% of our portfolio is defined as a wellbeing choice>including sugar free, natural, organic, fortified and portioncontrolled options

Energisedcolleagues

Top quartile performance on colleague commitment and>engagement compared to our benchmark companies*83% of colleagues rate Cadbury as a great place to work>88% of colleagues say they are proud to work at Cadbury>

* 2008 climate survey of employees


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Kraft has failed to recognise theappropriate valuation multiple fora confectionery business

Krafts offer represents a multiple of only11.6x Cadburys 2009 profits (earningsbefore interest, tax, amortisation anddepreciation, or EBITDA)*. Comparable

confectionery transactions have takenplace at a multiple of between 14.3x and18.5x historical EBITDA.

Hershey and Wrigley, as Cadburys closestpeers in chocolate and gum respectively,have been valued at multiples that reflectthe attractiveness of these confectionerycategories.

* Cadburys 2009 EBITDA will have been achieved, and so will be historical, by the conclusion of Krafts offer period (i.e. Day 60). Thisstatement includes a 2009 prot forecast which has been reported on for the purposes of the Takeover Code (See Appendix 2).

See sources and bases for detailed explanation.

Chocolate(46% of Cadbury revenue) 15.5x

Historical EBITDA proposed,

for Hershey by Wrigley

(not completed)

Gum(33% of Cadbury revenue) 18.5xHistorical EBITDA paidfor Wrigley by Mars

Multiple of EBITDA

Mars/Wrigley(2008)

18.5x

~15.0x

Wrigley/KraftCandy(2004)

Cadbury/Adams(2002)

14.3x

Wrigley/Hershey(Proposed,notcompleted2002)

15.5x

Perfetti/Van Melle(2001)

17.0x

11.6x

misses thewe have already created in Cadbury


value

Applying the multiples paid for ourclosest peers in chocolate and gumwould imply a value substantiallyin excess of krafts offer


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The premium implied in Krafts initial proposal was lowand has since been eroded

Kraft Cadbury/marketSince Kraft made itsinitial proposal, its share

price has fallen 5%,reducing the value ofits offer by 3%.

In the same period, equitymarkets and share prices

of Cadburys peers haverisen substantially andCadbury has announcedits strong Q3 results.

-5%Krafts share price

-3%Value of the offer

+7%FTSE 100

+11%Cadbury peer group

Krafts business model is unappealingand its stock is of uncertain value

The majority of the consideration comprises Krafts shares

For UK shareholders> , Kraft is only offering 300p in cash per Cadbury share, with the remainder of the consideration requiring youto swap Cadbury shares for CREST depositary interests in Kraft stockIn light of Krafts historical performance as custodians of shareholder value their stock today trades below its IPO price from>more than eight years ago we believe this is highly unappealing

Kraft (USD) Kraft (GBP) KraftPeer Group

12%

(5%)

49%

Kraft (USD) Kraft (GBP) KraftPeer Group

(9%) (23%)

20%

Share price performance since Krafts IPO

(June 2001 4 Sep 2009)Total shareholder return since Krafts IPO

(June 2001 4 Sep 2009)


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We are now two years into our Vision into Action planand are making excellent progress. In addition to deliveringagainst the targets we set, we have transformed theorganisation and its capabilities through restructuring

and investment.

We have great confidence in the potential of yourtransformed company. We have worked through ourplans for the next four years and are now setting out ourimproved targets for growth, profitability, cash generationand returns. These targets take us well beyond what wetargeted in Vision into Action without any incrementalrestructuring costs.

Your management team is as committed to these targetsas they were to the original Vision into Action plan.We are confident in our ability to deliver and enhancevalue for Cadbury and our shareholders.

Todd Stitzer, CEO

2010-2013Vision into Action plan

Higher performance,higher value


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upgraded

targetsOrganic RevenueGrowth

57%per annum

We are increasing our long-term revenue growthtarget to 5 7% per year. This reflects our confidencein continued growth from our emerging markets,our focus on high potential brands, consumer-ledinnovation and further development of ourdistribution network.

Trading Margin

1618%by 2013

We are ahead of plan to deliver our original Visioninto Action target of mid-teens margin by 2011.New initiatives that focus on leveraging the benefitsof our category-led model drive our upgradedmargin target of 1618%.

Operating CashConversion

8090%from 2010

The business is expected to be highly cash generative,enabling us to invest further in the business, increasereturns to shareholders and reduce debt.

Improve ROIC

>300bpsby 2013

Significantly enhanced returns are expected to bedelivered through the combination of improving

profitability and disciplined capital management.

Dividend Growth

doubledigit

The expected increased cash flow will allow us toincrease our dividend growth rate. We arecommitted to deliver double digit dividend growthfrom 2010 onwards.


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Key operational drivers of our increased growth

Focusing onadvantagedbrands

We plan to capitalise on our key>growth trends such as:

Chocolate: Fairtrade, sharing ,premium and gift packsGum: functional characteristicssuch as refreshment and dentalcareCandy: better-for-you and

indulgent segments

Centre-lled gumnow in 20 countries

Fairtrade Dairy Milk

on track for launchingin 5 key chocolatemarkets

Investing inconsumer-ledinnovation

Our plan assumes an ongoing>innovation rate of around 15%(proportion of revenues from newproducts and product extensions)We already have successfully>increased this from 6% in 2003 to14% in 2008

Dairy Milk Shotslaunched in Indiain 2008

Halls Creamy launched

in 2008

Strengtheningdistributionfurther

Continued improvements to our>distribution strength are expectedto lead directly to increasedmarket sharePast experiences provide strong>evidence of success UK impulse share up 220 bps

Mexico gum share at record 82.5% Brazil retail coverage up 15% since2007 to 240,000 outlets

Transformation ofour UK route tomarket in 2008and 2009

Strengthening ourroute to market inBrazil in 2008 and2009

Expandinginto whitespace

We have identified numerous>opportunities to expand into newcategories in existing markets andadjacent territoriesOur targets include only the benefit>of organic expansion, but we havean excellent track record of white

space acquisitions, an upside toour plan

Green & Blacksexpansion to the US

Intergum acquisition

in Turkey


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We have identified furtherimprovements across ourexisting cost base

The table below sets out the key initiativesunderlying our planned margin increasefrom 13.3%* in 2009 to our upgraded targetof 16 18% by 2013.

profitabilitytargets

Enhanced

% of 2009ERevenue

Margin Impact200709E

ExpectedMargin Impact201013E Drivers of Change in 20102013

Cost of GoodsSold 53%

100 bpsimprovement

150 250bpsimprovement

Manufacturing efficiencies via product standardisation>and continuous improvement programme, followingour successful network rationalisationStep change improvement in supply chain capabilities>Procurement savings through leveraging global scale>

Sales, General& Administration 18%

180 bpsimprovement

200 300bpsimprovement

Underlying SG&A growth to be constrained below>inflation, providing substantial operating leverageFurther Continental European restructuring>

Marketing 10% Broadlyunchanged Increase5075bps Increase in marketing spend to drive growth> Significant increase in marketing effectiveness with>focus on key brands and consumer segments

BusinessImprovementCosts

0.5% BroadlyunchangedIncrease25 50 bps

> These are the only costs required to implement thenext phase of Vision into Action and are embeddedin our margin targetThere will be no incremental below the line>restructuring costs beyond those previouslyannounced as part of Vision into Action or requiredas part of acquisitions and disposals

Other Costs 5% 75 bps1

improvementBroadly at

Total MarginImprovement

350 bps* ~250450 bps

2009E TradingMargin 13.3%*

2013 TradingMargin Target 1618%

1 As a result of logistics and distribution efciencies and the impact of the Australia Beverages disposal.* This statement includes a 2009 prot forecast which has been reported on for the purposes of the Takeover Code (See Appendix 2).


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The next four years of Visioninto Action are expected to behighly cash generative

The combination of our improved revenueand margin targets, together with ourcommitment to reduce capital expenditureand restructuring charges, are expectedto enable us to convert almost all of ourprofit into operating cash flow.

reinvesting in the business

cash returns to shareholders

reducing debt

> Capital expenditure at around 4 5% of revenue

> No incremental below the line restructuring charges

Converting 8090% of trading profit intooperating cash flow from 2010 onwards

Targeting around 700m per annum offree cash flow by 2013

cash generationHigher

Substantial cash generationwill be available to createvalue for shareholders


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Our enhanced long-term

targets

Organic revenuegrowth per year 57%

Trading marginby 2013 1618%Operating cashconversion from2010

8090%Improve ROICby 2013 >300bpsDividend growth

double digit

We are committed todeliver this significant further

value to shareholders


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rejectkraftsofferCadbury is a strong pure-playconfectionery business withiconic brands and excellentmarket positions

You own a unique andvaluable business whichcannot be recreated

We have transformedCadbury and are deliveringahead of our Vision intoAction plan

You have invested in thistransformation and areentitled to the full rewards


misses the value we havealready created in Cadbury

Do not let Kraft steal

your company

We expect the next phase ofVision into Action to deliverimproved revenue growth,enhanced protability and

higher cash returns

We are committed todeliver signicant further

value for shareholders

Cadbury is delivering higherperformance and higher value

Do not complete any form of acceptance


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b) The reference to 726p per share is based on the300p cash per Cadbury share and 0.2589 new Kraftshares per Cadbury share, as stated in Krafts OfferDocument. The value of 0.2589 new Kraft shares perCadbury share is calculated based on Krafts closingshare price of US$26.71 on 9 December 2009(being the latest practicable date prior to thepublication of this document) as quoted by NYSE

and an exchange rate of US$1.62185 to 1.00 on9 December 2009 (being the latest practicable dateprior to the publication of this document) as quotedby WM (The World Markets Company) / Reuters.

c) The reference to Cadbury having the number oneglobal brands in block chocolate, gum and candy Cadbury Dairy Milk, Trident and Halls is based onthe 2008 retail sales value of the global brand namefrom Euromonitor translated at current yearexchange rates.

d) The reference to Cadbury being the number oneconfectionery company in emerging markets is basedon Cadburys 2008 retail sales value (translated atcurrent year exchange rates) for all of the markets inthe world, including for example Brazil, Russia, Indiaand China, but excluding the US and the developedmarkets listed below, divided by the retail sales value(translated at current year exchange rates) for thesame set of markets, sourced from Euromonitor.

e) The reference to Cadbury being the number oneconfectionery company in developed markets outsideof the US is based on Cadburys 2008 retail sales

value (translated at current year exchange rates) in thefollowing markets: Austria, Australia, Belgium, Canada,Denmark, Finland, France, Germany, Greece, Ireland,Italy, Japan, the Netherlands, New Zealand, Norway,Portugal, Spain, Sweden, Switzerland and the UK,divided by the retail sales value (translated at currentyear exchange rates) for the same set of markets,sourced from Euromonitor.

f) The reference to average annual revenue growth ofaround 6% for the period 2007-9 is based on the 7%annual revenue growth for the year ended 2008

sourced from Cadburys full year 2008 resultspresentation, dated 25 February 2009, and the middleof the range of the revenue growth target as per theProfit Forecast published in Cadburys Q3 InterimManagement Statement dated 21 October 2009.

Nothing in this sources and bases section (other thanthe Profit Forecast) is intended to be a profit forecastand no statement in this sources and bases sectionshould be interpreted to mean that the earnings perCadbury Share for the current or future financialperiods will necessarily be greater than those for therelevant preceding financial period.

The relevant sources of information and bases ofcalculation are provided below in the order in whichsuch information appears in this document. Where suchinformation is repeated in this document, the underlyingsources and bases are not repeated.

a) Unless otherwise stated in this document:

(i) All financial information relating to Cadburyhas been extracted or derived (without anyadjustments) from either annual reports andaccounts of Cadbury, other information madepublicly available by Cadbury, Cadburysmanagement sources or the Profit Forecast setout in Appendix 2 of this document;

(ii) All information regarding the Offer is sourcedfrom the Offer Documents dated 4 December2009 and any other public material made availableby Kraft;

(iii) Values stated throughout this document havebeen rounded and are given to the stated numberof decimal places;

(iv) Information contained in this document regardingmarket share, market size, market position andmarket growth in the global and regionalchocolate, gum, candy or total confectionerymarkets is sourced from Cadburys managementestimates and calculations based upon data fromEuromonitor Passport, AC Nielsen and InformationResources Inc (IRI), peer company annual reportsand other public filings;

(v) References to trading profit refer to underlyingoperating profit and references to trading marginand margin refer to underlying operating margin,as mentioned in Appendix 2 of this document.

Sources of Information and Bases of Calculation

andSources bases


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(i) The offer value of 10.3bn is based on thefollowing:

300p in cash per Cadbury share and 0.2589 newKraft shares per Cadbury share as per the OfferDocument;

Krafts closing share price of US$26.71, as quotedby NYSE on 9 December 2009 (being the latestpracticable date prior to the publication of thisdocument);

Exchange rate of US$1.62185 to 1.00, as quotedby WM/Reuters on 9 December 2009 (being thelatest practicable date prior to the publication ofthis document);

Cadburys issued and to be issued share capital isbased on 1,372,762,047 Cadbury shares in issue asat 8 December 2009 as disclosed by Cadbury in its

Regulatory Information Service announcementmade in accordance with Rule 2.10 of the TakeoverCode dated 8 December 2009 and up to a further40,636,259 Cadbury options and shares that couldbe issued to satisfy the exercise and vesting ofoptions and awards under the Cadbury shareschemes as at the close of business on9 December 2009 (being the latest practicabledate prior to the publication of this document).

(ii) Estimated adjusted net debt of 1,369m as of31 December 2009 is based on:

Estimated unadjusted net debt of 1,494m as of31 December 2009 as per Cadburys managementestimates and forecast foreign exchange rates asper the Profit Forecast;

Less book value of associates of 28m and tradeinvestments of 1m plus minority interest of20m, estimated as of 31 December 2009 as perCadburys management estimates and forecastforeign exchange rates as contained in the ProfitForecast. The estimated book value of associatesis principally comprised of Cadburys 20% stake

in Camelot;

Less 105m which would be received from theexercise of options pursuant to the adjustment tothe number of shares as stated in (i) above. Itshould be noted that in the Offer Document, Kraftappears to have used an inconsistent methodologywhich adjusted the number of shares outstandingfor the full number of options but did not makeany corresponding adjustment to net debt forreceivable proceeds from exercise of these options;

g) The reference to increased margins by over 350basis points (bps) for the period 2007-9 is based onCadburys estimated margin improvement from 9.8%,as reported in Cadburys FY 2007 results presentationdated 19 February 2008, to 13.3%* for the year ending31 December 2009, including the impact of foreignexchange rate movements during the period. The

table below sets out further detail. Data on margin(%) is rounded to the nearest tenth of one percentand improvement (bps) is rounded to the nearest 5 bps.

Margin Improvement

(%) (bps) Source

FY 2007 9.8% FY 2008 ResultsSale of Australia PresentationBeverages 30bps (February 2009)FY 2007 Re-presented 10.1%

Constant currency FY 2008 Resultsimprovement (2008) 150bps PresentationForeign exchange (2008) 30bps (February 2009)

FY 2008 11.9%Constant currencyimprovement (2009) 135bps*Foreign exchange (2009) 15bps*

Improvement toFY 2009 (incl. FX) 13.3% >350bps

Note: The table does not add exactly to the >350bps improvement, dueto the rounding stated above.

h) The reference to an incremental 320m of tradingprofit for the period 2007-9 is based on Cadburysreported underlying profit from continuing operationsof 473m for the year ended 2007, as re-presented

in Cadburys annual report for the year ended 2008,and Cadburys underlying profit from operations of794m* for the year ending 2009, based on theProfit Forecast.

i) The reference to 750m of restructuring investmentrelated to Vision into Action is based on Cadburysestimated exceptional restructuring charge of550m, as announced in the half year 2009 resultspresentation dated 29 July 2009 and 200m incapital expenditure, announced in the investorupdate presentation dated 19 June 2007.

j) The reference to approximately 80% of the 750mrestructuring investment (exceptional restructuringcharge and related capital expenditure) having beenmade to date but investors have only receivedapproximately 45% of the expected annual savings isbased on Cadburys internal management estimates.

k) The reference to the 11.6x Cadburys 2009 forecastEBITDA* multiple is based on the value of Krafts offerfor the entire issued and to be issued share capital,plus Cadburys estimated adjusted net debt, all dividedby Cadburys estimated EBITDA for the year ending

2009, the sources for which are set out as below:

*This statement includes a 2009 profit forecast which has been reportedon for the purposes of the Takeover Code (See Appendix 2).


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t) The reference to the margin improvement beingahead of plan is based on Cadburys reported marginsfor the years ended 31 December 2007 and 2008and Cadburys forecast margin for the year ending31 December 2009, compared to the internal planwhich Cadburys Board of Directors approved in June2007 in conjunction with the announcement of Vision

into Action to the public.

u) The bases of the references to the multiples ofEBITDA of precedent transactions not detailed aboveare as follows:

The sample of precedent transactions has been chosenbased on transactions within the confectionery sectorannounced within the last decade with transactionvalues greater than US$500m, sourced from databasesearches from Thomson Reuters SDC and Dealogic.The comparability of precedent transaction multiplesis affected amongst other things by the availability of

detailed public financial information and the dates ofthe transaction announcements and closing versusthe dates of the available historical financials. Theprecedent transaction multiples are calculated basedon the same methodology used to calculate the 11.6xCadburys 2009 forecast EBITDA multiple as detailedin (k) above.

(i) Perfetti / Van Melle (2001): The 17.0x EBITDAmultiple was quoted as the multiple of earningsbefore interest, taxation, depreciation andamortisation for the year ending 31 December

1999 in Perfettis Offer Document dated15 January 2001. This is the most recent publiclyavailable data for the EBITDA of Van Melle priorto the transaction;

(ii) Cadbury / Adams (2002): The 14.3x EBITDAmultiple is based on the US$4.2bn sale pricequoted in Cadburys and Pfizers official pressreleases relating to the transaction dated17 December 2002 and the underlying EBITDAfor the twelve month period ended 31 December2001. This represents the relevant multiple to theseller (Pfizer) in the transaction as it is not adjusted

for a US$450m tax benefit. This tax benefit wascreated as a result of the transaction (assetwrite-up) and only accrued to Cadbury, as thebuyer. It did not have an equivalent negativeimpact on Pfizer;

(iii) Wrigley / Kraft Candy (2004): The circa 15.0xEBITDA multiple is based on a transaction valueof approximately US$1.5bn sourced from Kraftspress release relating to the transaction dated15 November 2004 and an EBITDA quoted froman article in The Wall Street Journal dated

15 November 2004: The sale unloads brandsthat generated for Kraft roughly $500 million insales and just under $100 million in earnings beforeinterest, taxes, depreciation and amortization.

p) The revenue numbers shown for South America, Indiaand Southern Africa are all sourced from Cadburysinternal management accounts for the years ended2004-8 and Cadburys management estimates for theyear ending 2009. Southern Africa is defined as SouthAfrica, Botswana, Namibia, Mozambique, Angola,Malawi and Kenya.

q) The references to the market shares (rounded to thenearest percentage points) in Cadburys top fivedeveloped markets are sourced as follows:

(i) UK: AC Nielsen 52 weeks ending31 October 2009;

(ii) US: Information Resources Inc 52 weeks ending15 November 2009;

(iii) Australia: AC Nielsen 52 weeks ending31 October 2009;

(iv) France: AC Nielsen 52 weeks ending8 November 2009;

(v) Canada: AC Nielsen 52 weeks ending24 October 2009.

All category shares are based on retail sales value andtotal coverage (all relevant trade channels measuredby the data provider in any particular market).

The reference to the Number 1 and Number 2positions in category shares of chocolate, gum and

candy in UK, US, Australia, France and Canada isbased on company shares ranking by retail salesvalue denoted in local currency in each market.The data source for each market is the same asidentified above.

r) The reference to an increase in revenue of around1.3bn for the period 2007-9 is based on thedifference between Cadburys reported revenue of4,699m for the year ended 2007, as re-presentedin Cadburys annual report for the year ended 2008,and the middle of the range of the revenue growth

target as per the Profit Forecast, published inCadburys Q3 Interim Management Statement dated21 October 2009, including the additional impact ofexchange rate movements during the period.

s) The reference to the forecast trading margin of13.3%* and around two thirds of the improvementtowards the 2011 target having been delivered, isbased on Cadburys forecast improvement from2007-09 of 350bps from Cadburys reported tradingmargin of 9.8% for the year ended 2007 sourcedfrom Cadburys FY 2007 results presentation dated19 February 2008, versus an assumed Vision intoAction target of c. 500bps in the original Vision intoAction plan.

*This statement includes a 2009 profit forecast which has been reportedon for the purposes of the Takeover Code (See Appendix 2).


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For further assistance call the Shareholder Helpline:

> UK and European Investors (toll free) on

00800 5464 5464> US retail investors (toll free) on

1 (800) 859 8508> Worldwide investors on

+1 (718) 439 2246You should be aware that the Shareholder Helpline cannot provide any nancial, legal or taxation advice in

connection with the Offer nor any advice on the merits of the Offer.

performance,Higher

valueHigherReject Krafts offer


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www.cadbury.com

Cadbury plcCadbury House, Uxbridge Business Park,Sanderson Road, Uxbridge UB8 1DH

Registered in England No. 6497379

For further assistance call the Shareholder Helpline:UK and European Investors (toll free) on 00800 5464 5464US retail investors (toll free) on 1 (800) 859 8508

Worldwide investors on +1 (718) 439 2246


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Appendices

Reject Krafts offer

performance,Higher

valueHigher


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Cadbury ADS, and upon the terms and subject to the

conditions set out in the Offer Documents. On 4 December2009, Kraft filed with the SEC a registration statement onForm S-4 containing the US Offer Document and a prospectus

relating to the Kraft Shares to be issued by Kraft in connectionwith the Offer. According to the Offer Documents, the Offer

will expire at 1:00 p.m. (London time) / 8:00 a.m. (New Yorktime) on 5 January 2010 unless Kraft extends the Offer.

The purpose of the Offer, as stated by Kraft in the OfferDocuments, is to acquire control of, and ultimately the entire

voting share capital of, Cadbury. For a full description of theterms and conditions of the Offer, please refer to the

Offer Documents.

Kraft and Cadbury actions in relation to the Offer to dateOn 28 August 2009, Irene Rosenfeld, Chairman and ChiefExecutive Officer of Kraft, met with Mr. Carr, following a

request for such a meeting from Irene Rosenfeld. At thismeeting, Ms. Rosenfeld proposed a business combinationbetween Cadbury and Kraft. Following the meeting, Mr. Carr

notified the Directors of the proposal and Ms. Rosenfeld sent

a letter to Mr. Carr setting out details of a possible offerfor Cadbury. Ms. Rosenfeld stated that, subject to certainpre-conditions, Kraft was prepared to offer 300 pence in cash

and 0.2589 new Kraft Shares per Cadbury Share. The possibleoffer valued each Cadbury Share at 755 pence (based on the27 August 2009 closing price of US$28.42 for a Kraft Share

and an exchange rate of 1.617 US$/).

After the Board had given Krafts proposal carefulconsideration, Mr. Carr sent a letter to Ms. Rosenfeld informingher that the Directors rejected Krafts unsolicited proposal on

the grounds that it was unattractive and fundamentallyundervalued the Group.

On 7 September 2009, Kraft released a press announcementin accordance with Rule 2.4 of the City Code setting out the

terms of a possible offer for Cadbury and Ms. Rosenfeldaddressed a letter to Mr. Carr asking him to reconsider

Cadburys rejection of the possible offer.

On the same day, Cadbury released a response statementconfirming Cadburys rejection of the possible offer and statingthat the possible offer fundamentally undervalued the Group

and its prospects.

On 12 September 2009, Mr. Carr sent a letter to Ms. Rosenfeldstating that the prospect of Cadbury being absorbed into

Krafts low growth, conglomerate business model wasunappealing and that the Board remained convinced thatoptimum shareholder value would be achieved through

Cadburys standalone pure-play confectionery strategy.

1. ResponsibilityThe Directors accept responsibility for the information

contained in this document, save that the sole responsibilityaccepted by the Directors in respect of information relating

to Kraft contained in this document has been to ensure thatsuch information has been correctly compiled from publishedsources and is correctly and fairly reproduced and presented.

Subject to the aforesaid, the Directors confirm that to thebest of their knowledge and belief (having taken all reasonablecare to ensure that such is the case), the informationcontained in this document for which they are responsible is in

accordance with the facts and, where appropriate, does notomit anything likely to affect the import of such information.

2. Company details

The Company, which is the subject of the Offer, is incorporatedand registered in England and Wales as a public limited

company with its registered office, being the location of itsprincipal executive offices, at Cadbury House, Sanderson Road,

Uxbridge, UB8 1DH, United Kingdom. The Companys

telephone number at this address is +44 (0)1895 615000and its website address is www.cadbury.com.

The telephone numbers for general Offer-related enquiries are:

> UK and European investors (toll free) : 00800 5464 5464

> US retail investors (toll free) : 1 (800) 859 8508

> Worldwide investors : + 1 (718) 439 2246

3. Share capitalThe title of the class of equity securities to which the Offer

relates is ordinary shares of 10 pence each in the Company(the Cadbury Shares) and American depositary shares, each

representing four Cadbury Shares (the Cadbury ADSs). Asat the Latest Practicable Date, there were 1,372,762,047

Cadbury Shares (including Cadbury Shares represented byCadbury ADSs) issued and outstanding and a maximum ofa further 40,636,259 Cadbury Shares were issuable or

otherwise deliverable in connection with the vesting ofoutstanding share awards of Cadbury.

4. Background to the Offer

OverviewThis document relates to the unsolicited offer by Kraft Foods

Inc. (Kraft), a Virginia corporation, as disclosed in the Offer

Document posted to Shareholders on 4 December 2009 andthe US Offer Document filed with the SEC on 4 December2009. The Offer is for all Cadbury Shares and Cadbury ADSson the basis of 300 pence and 0.2589 Kraft shares per

Cadbury Share, and 1,200 pence and 1.0356 Kraft Shares per

appendix 1Additional information


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On 24 September 2009, Cadbury requested that the Panel

impose a deadline on Kraft by which time it must eitherannounce a firm intention to make an offer for Cadbury under

Rule 2.5 of the City Code, or announce that it does not intendto make an offer for Cadbury. The Panel announced on

30 September 2009 that it had imposed a deadline of 5.00 p.m.(London time) on 9 November 2009 for Kraft to do this.

On 9 November 2009, Kraft announced its firm intention tomake the Offer in accordance with Rule 2.5 of the City Code.

The cash price per share and exchange ratio were as set out inKrafts announcement of 7 September 2009. The Offer valuedeach Cadbury Share at 717p (based on the 6 November 2009

closing price of US$26.78 for a Kraft Share and an exchangerate of 1.6609 US$/).

On the same day, Cadbury issued an announcement statingthat the Board had emphatically rejected the Offer and that it

recommended that Shareholders also reject the Offer. Mr. Carrstated that the Offer did not come remotely close to reflecting

the true value of Cadbury, and involved the unattractiveprospect of the absorption of Cadbury into a low growth

conglomerate business model.

On 4 December 2009, Kraft formally made the Offer by

posting the Offer Document and filing the US OfferDocument with the SEC. The Offer valued each Cadbury

Share at 713p (based on the 1 December 2009 closing priceof US$26.50 for a Kraft Share and an exchange rate of1.6627 US$/).

This document sets out Cadburys response to the Offer

in accordance with Rule 25 of the City Code and itsrecommendation to Shareholders and holders of CadburyADSs in accordance with Rule 14D-9 under the US Securities

Exchange Act of 1934, as amended.

The US Offer Document states that the principal executiveoffices of Kraft are located at Three Lakes Drive, Northfield,

IL 60093, United States of America.

5. DirectorsThe Directors and their positions are set out below:

Name Position

Roger Carr Chairman

Todd Stitzer Chief Executive Officer

Andrew Bonfield Chief Financial Officer

Dr. Wolfgang Berndt Independent Non-Executive Director

Guy Elliott Senior Independent Non-ExecutiveDirector

Lord Patten Independent Non-Executive Director

Raymond Viault Independent Non-Executive Director

Baroness Hogg Independent Non-Executive Director

Colin Day Independent Non-Executive Director

6. Disclosure of interests and dealings

Definitions6.1 References in this paragraph to:

(A) acting in concert means any such person acting or

deemed to be acting in concert as such expression isdefined in the City Code;

(B) associate means:

(i) the subsidiaries, fellow subsidiaries and associatedcompanies of Cadbury and companies of which any

such subsidiaries or associated companies areassociated companies;

(ii) connected advisers and persons controlling, controlledby or under the same control as such connected

advisers;

(iii) the Directors and the directors of any company coveredin (i) above (together in each case with their closerelatives and related trusts);

(iv) the pension funds of Cadbury or any company covered

in (i) above;

(v) any investment company, unit trust or other person

whose investments an associate manages on adiscretionary basis, in respect of the relevant

investment accounts;

(vi) an employee benefit trust of Cadbury or any companycovered in (i); and

(vii) a company having a material trading arrangement

with Cadbury ;

(C) connected advisers normally includes only the following(and will not normally include a corporate broker which is

unable to act in connection with the Offer because of aconflict of interest):

(i) in relation to Cadbury an organisation which is advisingthat party in relation to the Offer and a corporate

broker to that party;

(ii) in relation to a person who is acting in concert withCadbury, an organisation which is advising that person

either in relation to the Offer, or in relation to thematter which is the reason for that person being amember of the relevant concert party; and

(iii) in relation to a person who is an associate of Cadbury

by virtue of paragraph (B)(i) above, an organisationwhich is advising that person in relation to the Offer;

(D) control means an interest or interests in shares carryingin aggregate 30 per cent. or more of the voting rights

attributable to the share capital of a company which arecurrently exercisable at a general meeting, irrespective ofwhether such interest or interests give de facto control;

Appendix 1 continued


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(E) dealings or dealt includes the following:

(i) the acquisition or disposal of securities or the right

(whether conditional or absolute) to exercise or directthe exercise of the voting rights attached to securities,

or of general control of securities;

(ii) the taking, granting, acquisition, disposal, entering into,

closing out, termination, exercise or variation of anoption (including a traded option contract), in respect

of any securities;

(iii) subscribing or agreeing to subscribe for securities;

(iv) the exercise or conversion, whether in respect of

new or existing securities, of any securities carryingconversion or subscription rights;

(v) the acquisition of, disposal of, entering into, closing out,exercise (by either party) of any rights under, or variation

of, a derivative referenced, directly or indirectly, tosecurities;

(vi) the entry into or termination or variation of the termsof any agreement to purchase or sell securities; and

(vii) any other action resulting, or which may result, in an

increase or decrease in the number of securities inwhich a person is interested or in respect of whichhe has a short position;

(F) derivative includes any financial product the value of

which, in whole or in part, is determined directly orindirectly by reference to the price of an underlyingsecurity;

(G) disclosure period means the period commencing on 7

September 2009 (being the date of commencement of theOffer Period) and ending on the Latest Practicable Date;

(H) interested in securities includes if a person has longeconomic exposure, whether absolute or conditional, to

changes in the price of those securities (but a person whoonly has a short position in securities is not treated as

interested in those securities). In particular a person willbe treated as having an interest in securities if:

(i) he owns them;

(ii) he has the right (whether conditional or absolute) toexercise or direct the exercise of the voting rightsattaching to them or has general control of them;

(iii) by virtue of any agreement to purchase, option or

derivative, he has the right or option to acquire themor call for their delivery or is under an obligation to

take delivery of them, whether the right, option orobligation is conditional or absolute and whether itis in the money or otherwise; or

(iv) he is a party to any derivative whose value is determined

by reference to their price and which results, or may

result, in his having a long position in them;

and references to interests of a Director in relevant

securities shall include all interests of any other personwhose interests in shares Directors are taken to be

interested in pursuant to Part 22 of the Act and relatedregulations;

(I) paragraph 1 associate means Cadbury and its subsidiariesand associated companies of Cadbury and companies of

which any such subsidiary or associated company is anassociated company. For this purpose, ownership or control

of 20 per cent. or more of the equity share capital of acompany is the test of associated company status;

(J) relevant securities includes:

(i) shares and any other securities in Cadbury or Kraft, asthe case may be, conferring voting rights;

(ii) equity share capital of Cadbury or Kraft, as the case maybe; and

(iii) any securities convertible into, or rights to subscribe forthe securities of Cadbury or Kraft, as the case may be,

described in paragraphs (i) and (ii) above; and

(K) short position means any short position (whether

conditional or absolute and whether in the money orotherwise) including any short position under a derivative.

Interests in Kraft relevant securities

6.2 Save as disclosed in paragraph 6.3 below, as at the Latest

Practicable Date:

(A) neither Cadbury nor any person acting in concert with

Cadbury had any interest in or right to subscribe for Kraft

relevant securities;

(B) no Director had any interest in or right to subscribe forKraft relevant securities;

(C) no paragraph 1 associate of Cadbury had any interest in or

right to subscribe for Kraft relevant securities;

(D) no pension fund or employee benefit trust of Cadbury or

any associated company had any interest in or right tosubscribe for Kraft relevant securities;

(E) no connected adviser of Cadbury, of any person acting inconcert with Cadbury or of any paragraph 1 associate of

Cadbury, nor any person controlling, controlled or underthe same control as any such connected adviser (except for

an exempt principal trader or exempt fund manager) hadany interest in or right to subscribe for Kraft relevant

securities; and

(F) neither Cadbury nor any person acting in concert with

Cadbury had borrowed or lent any Kraft relevant securities.


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6.3 As at the Latest Practicable Date, the following persons (being connected advisers or persons controlling, controlled by or

under the same control as a connected adviser (except exempt principal traders or exempt fund managers) to Cadbury) ownedor controlled the following Kraft relevant securities:

Name Type of interest Purchased/written Number of Kraft Shares

Goldman Sachs & Co. Own n/a 17,291 (short)

Goldman Sachs & Co. as discretionary manager Own n/a 146,492

Goldman Sachs Financial Markets Own n/a 3,353,823 (short)Goldman Sachs & Co.1 Call option Purchased 11,037 contracts, each over

100 Kraft Shares

Goldman Sachs & Co.1 Call option Written 11,664 contracts, each over100 Kraft Shares

Goldman Sachs & Co.1 Put option Purchased 17,793 contracts, each over100 Kraft Shares

Goldman Sachs & Co.1 Put option Written 19,891 contracts, each over

100 Kraft Shares

Goldman Sachs Financial Markets Swap Purchased 1,333,766

Goldman Sachs Financial Markets Swap Purchased 2,161,194

Goldman Sachs Financial Markets Contract for

difference Written 78,294

Bank Morgan Stanley AG Own n/a 11,155

Bank Morgan Stanley AG Own n/a 11,155 (short)

UBS Financial Services Own n/a 1,319,343

1 NOTE: These interests have been aggregated in accordance with the City Code.

Dealings in Kraft relevant securities

6.4 Save as set out in paragraph 6.5 below, during the disclosure period there were no dealings in Kraft relevant securities by:

(A) Cadbury;

(B) the Directors;

(C) persons acting in concert with Cadbury; and

(D) persons referred to in paragraphs 6.2(C) to 6.2(E) (inclusive) above.



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6.7 As at the Latest Practicable Date, the following conditional awards of Cadbury Shares had been made to the Executive

Directors and will vest subject to certain service and performance-related conditions. Non-Executive Directors are not entitledto participate in Cadbury share plans.

Maximum number of

Director Plan name Cadbury Shares awarded Time of award Vesting date

Andrew Bonfield ISAP 200,000 February 2009 50,000 will vest in February 2010

50,000 will vest in February 2011

50,000 will vest in February 201250,000 will vest in February 2013

LTIP 275,561 February 2009 98,766 will vest in March 2011176,795 will vest in March 2012

Todd Stitzer BSRP 207,042 March 2007 March 2010276,050 March 2008 March 2011

688,245 March 2009 March 2012

LTIP 165,669 February 2007 March 2010287,797 May 2008 March 2011469,889 February 2009 March 2012

6.8 As at the Latest Practicable Date, the following options over Cadbury Shares, which remain outstanding, had been granted

to the Executive Directors. Non-Executive Directors are not entitled to participate in Cadbury share option schemes.

Number of Exercise Earliest exercise Latest exercise

Director Option scheme Cadbury Shares Date of grant price () date date

Todd Stitzer Cadbury 246,867 1 September 2001 5.314 1 September 2004 31 August 2011

Schweppes 269,310 24 August 2002 5.375 24 August 2005 23 August 2012Share Option 298,850 10 May 2003 3.916 10 May 2006 9 May 2013

Plan 1994

Cadbury 293,547 28 August 2004 4.896 28 August 2007 27 August 2014

Schweppes 254,946 2 April 2005 5.8541 2 April 2008 1 April 2015Share Option

Plan 2004

6.9 Save as disclosed in paragraphs 6.10 to 6.11 (inclusive) below, as at the Latest Practicable Date:

(A) no paragraph 1 associate of Cadbury;

(B) no pension fund or employee benefit trust of Cadbury or of any paragraph 1 associate of Cadbury; nor

(C) any connected adviser of Cadbury, of any person acting in concert with Cadbury or of any paragraph 1 associate of Cadbury,

nor any person controlling, controlled or under the same control as any such connected adviser (except for an exemptprincipal trader or exempt fund manager)

had any interest in or right to subscribe for Cadbury relevant securities.

6.10 As at the Latest Practicable Date, the following person (being an employee benefit trust of Cadbury) owned or controlledthe following Cadbury relevant securities:

Name Number of Cadbury Shares

Cadbury Schweppes Employee Trust 1,542,401



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6.11 As at the Latest Practicable Date, the following person (being a connected adviser or a person controlling, controlled by or

under the same control as a connected adviser (except exempt principal traders or exempt fund managers) to Cadbury) ownedor controlled the following Cadbury relevant securities:

Name Number of Cadbury Shares

Goldman Sachs Bank as discretionary manager 612

Goldman Sachs & Co. 49,714

Goldman Sachs & Co. as discretionary manager 2,608UBS AG London Branch 137,800

UBS Financial Services Inc. 8,307

6.12 As at the Latest Practicable Date, neither Cadbury nor any person acting in concert with Cadbury had borrowed or lentany Cadbury relevant securities.

Dealings in Cadbury relevant securities6.13 Save as disclosed in paragraphs 6.14 to 6.16 (inclusive) below, during the disclosure period there were no dealings in Cadburyrelevant securities by Cadbury, the Directors, any Executive Officer, Affiliate or subsidiary of Cadbury or, so far as the Directorsare aware having made due and careful enquiry, any of the categories of persons referred to in paragraph 6.9(A) to (C) above.

6.14 As at the Latest Practicable Date, the following dealings in Cadbury Shares and Cadbury ADSs by Directors had taken placeduring the disclosure period:

Number of Cadbury

Director Date Transaction Shares/Cadbury ADSs Price Paid

Dr. Wolfgang Berndt 6 October 2009 Purchase, following 1,400 Cadbury Shares 7.96election to surrender part

of Directors fee for theacquisition of Cadbury Shares,pursuant to an agreement

entered into outside of theOffer Period

Roger Carr 6 October 2009 As above 1,634 Cadbury Shares 7.96

Colin Day 6 October 2009 As above 747 Cadbury Shares 7.96Guy Elliott 6 October 2009 As above 1,143 Cadbury Shares 7.96

Baroness Hogg 6 October 2009 As above 560 Cadbury Shares 7.96

Lord Patten 6 October 2009 As above 1,167 Cadbury Shares 7.96

Raymond Viault 6 October 2009 Purchase, following 369 Cadbury ADSs US$50.62 perelection to surrender part (representing 1,476 Cadbury ADS

of Directors fee for the Cadbury Shares)acquisition of Cadbury ADSs,pursuant to an agreement


Guy Elliott 16 October 2009 Purchase through 92 Cadbury Shares 7.89

participation in the InterimDividend 2009 DRIP,pursuant to an agreement



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6.15 As at the Latest Practicable Date, the following dealings in Cadbury Shares and Cadbury ADSs by Executive Officers had

taken place during the disclosure period:

Number of Cadbury

Executive Officer Date Transaction Shares/Cadbury ADSs Price Paid

Stefan Bomhard 11 September 2009 Grant of conditional share 32,000 Cadbury Shares 0.00awards under the

Companys ISAP pursuant

to an agreemententered into outside theOffer Period

Ignasi Ricou 11 September 2009 As above 35,000 Cadbury Shares 0.00

Chris Van Steenbergen 14 September 2009 Acquisition through 18 Cadbury Shares 7.76participation in the SIP

Stefan Bomhard 12 October 2009 As above 16 Cadbury Shares 7.85

Chris Van Steenbergen 12 October 2009 As above 16 Cadbury Shares 7.85

Chris Van Steenbergen 16 October 2009 Acquisition through 9 Cadbury Shares 7.86participation in the Interim

Dividend 2009 DRIPthrough the SIP

Antonio Fernandez 16 October 2009 Acquisition through 242 Cadbury Shares 7.89participation in the InterimDividend 2009 DRIP

Antonio Fernandez 16 October 2009 As above 0.584 Cadbury ADSs $51.54 per(representing 2 Cadbury ADS

Cadbury Shares)

James Chambers 27 October 2009 Exercise of options under 341 Cadbury ADSs $43.89the Companys all- (representing 1,364employee US Employees Cadbury Shares)

Share Option Plan

Antonio Fernandez 27 October 2009 As above 227 Cadbury ADSs $43.89(representing 908

Cadbury Shares)Henry Udow 27 October 2009 As above 284 Cadbury ADSs $43.89

(representing 1,136Cadbury Shares)

Stefan Bomhard 9 November 2009 Acquisition through 18 Cadbury Shares 7.58

participation in the SIP

Chris Van Steenbergen 9 November 2009 As above 18 Cadbury Shares 7.58

Stefan Bomhard 7 December 2009 As above 18 Cadbury Shares 7.95

Chris Van Steenbergen 7 December 2009 As above 18 Cadbury Shares 7.95

6.16 As at the Latest Practicable Date, the following dealings for value in Cadbury Shares by an employee benefit trust of

Cadbury had taken place during the disclosure period7

:

Price

Name Date of dealing Transaction Number of Cadbury Shares (lowest-highest)

Cadbury Schweppes 7 September 2009 Disposals 4,519,803 7.55 8.15Employee Trust 9 December 2009

7 NOTE: These dealings have been aggregated in accordance with the City Code.

General

6.17 Cadbury has not redeemed or purchased any Cadbury Shares during the 12-month period ending on the Latest

Practicable Date.

6.18 As at the Latest Practicable Date, no arrangements of the kind referred to in Note 6(b) to Rule 8 of the City Code existedbetween Cadbury or any associate of Cadbury and any other person, save as disclosed in this document.



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8. Material contracts

8.1 Details of material contracts (not being contracts entered

into in the ordinary course of business) which have beenentered into by any member of the Group during the periodcommencing on 7 September 2007 (being the date two yearsbefore the commencement of the Offer Period) and ending on

the Latest Practicable Date are as follows:

Demerger of North American beverages business(A) On 7 May 2008, Cadbury Schweppes demerged its North

American beverages business to Dr Pepper SnappleGroup, Inc. (DPS). Pursuant to a scheme of arrangementand a reduction of capital under the Companies Act 1985,

Cadbury Schweppes shareholders received 64 CadburyShares and 12 shares in DPS for every 100 Cadbury

Schweppes ordinary shares they owned at 6:00 p.m.(London time) on 1 May 2008. Cadbury entered into aseparation and distribution agreement with Cadbury

Schweppes and DPS dated 1 May 2008 (the SDA) whichset forth the agreements necessary to effect the demerger.

Pursuant to the SDA, assets relating to the NorthAmerican beverages business were retained by ortransferred to DPS, subject to licences between the

parties. Assets relating to the worldwide confectioneryoperations and other beverages business were retained by

or transferred to Cadbury Schweppes, subject to licencesbetween the parties. Liabilities were allocated to DPS to

the extent they related to the North American beveragesbusiness and were allocated to Cadbury Schweppes to the

extent they related to the worldwide confectioneryoperations and other beverages business. The SDA alsoallocated other liabilities to either the DPS group of

companies or Cadbury Schweppes and the Group andprovided for cross-indemnities principally designed to place

financial responsibility for the obligations and liabilities ofthe North American beverages business with DPS and

financial responsibility for the obligations and liabilitiesof the worldwide confectionery operations and otherbeverages business with Cadbury Schweppes.

Financing(B) Facility agreement

On 30 June 2009, Cadbury Finance as borrower and

Cadbury Holdings as Original Guarantor (together theObligors) entered into a syndicated facility agreement

(the Facility Agreement) with, among others, theMandated Lead Arrangers as defined therein, the Arranger

as defined therein, the Banks as defined therein, Banc ofAmerica Securities Limited as Agent and Bank of America

N.A. as Dollar Swingline Agent, pursuant to which amulti-currency revolving credit facility in the amount of450,000,000 (including a 370,500,000 swingline facility)

(the Facility) is made available to Cadbury Finance for thegeneral corporate purposes of the Group.

The rate of interest applicable to each interest periodrelating to an advance (other than swingline advances)

under the Facility is the sum of LIBOR or EURIBOR, as thecase may be, the applicable margin and mandatory costs.Repayments under the Facility are to be made on the last

day of the relevant interest period, and Cadbury Financemust repay the Facility in its entirety on 26 June 2012. A

commitment fee is payable on undrawn commitmentsunder the Facility.

If, following the occurrence of a change of control of eitherthe Company or Cadbury Holdings, any bank and the

7.15 The current annual fees payable to the Non-Executive Directors are set out in the table below.

Non-Executive Director fee Fee for chairing a committee /

Name (year to 31 December 2009) Board Total fee

Dr. Wolfgang Berndt (a) 60,000 15,000 75,000

Roger Carr (Chairman) (b) 60,000 390,000 450,000

Colin Day(c) 60,000 20,000 80,000

Guy Elliott (d) 75,000 75,000Baroness Hogg 60,000 60,000

Lord Patten (e) 60,000 15,000 75,000

Raymond Viault US$150,000 US$150,000

(a) Dr. Berndt is Chairman of the Remuneration Committee.(b) Mr. Carrs fee for chairing the Nomination Committee is included in the Chairmans fee.(c) Mr. Day is Chairman of the Audit Committee.(d) Mr. Elliotts fee includes 15,000 per year as Senior Independent Non-Executive Director.(e) Lord Patten is Chairman of the Corporate and Social Responsibility Committee.

Mr. Carr, as Chairman, is also provided with a car and driver for business purposes as required. Each Non-Executive Directormay elect to surrender part of his fee for the acquisition of Cadbury Shares following each calendar quarter. Non-Executive

Directors are not permitted to sell or deal in Cadbury Shares acquired pursuant to this arrangement whilst they remainDirectors without the prior written consent of the Chairman.

7.16 The Non-Executive Directors are not entitled to participate in any of the Cadbury pension schemes and receive no benefitsother than those set out above.

General7.17 Save as set out above, there are no service contracts in force between any Director, or proposed Director, and Cadbury orany of its subsidiaries and no service contract has been entered into or amended during the six months preceding the date of

this document.


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Other competition filings14.5 Both Kraft and Cadbury sell products in a number of otherjurisdictions throughout the world, where antitrust filings or

approvals may be required or advisable in connection with theOffer. Kraft has submitted various such filings in certain other

jurisdictions and cannot therefore rule out the possibility that aforeign antitrust authority might require remedial undertakingsas a condition of approval.

15. Consents

15.1 Goldman Sachs International has given and not withdrawnits written consent to the issue of this document including

references to its name in the form and context in which theyappear and to the inclusion herein of the report on the Profit

Forecast set out in Appendix 2.

15.2 Morgan Stanley & Co. Limited has given and notwithdrawn its written consent to the issue of this documentincluding references to its name in the form and context in

which they appear and to the inclusion herein of the reporton the Profit Forecast set out in Appendix 2.

15.3 UBS Limited has given and not withdrawn its writtenconsent to the issue of this document including references to

its name in the form and context in which they appear and tothe inclusion herein of the report on the Profit Forecast set

out in Appendix 2.

15.4 Deloitte LLP has given and not withdrawn its written

consent to the inclusion herein of its report on the ProfitForecast set out in Appendix 2.

16. Documents available for inspection

16.1 Copies of the following documents will be available forinspection at the offices of Slaughter and May at One Bunhill

Row, London EC1Y 8YY during normal business hours on anyweekday (public holidays excepted) up to and including the end

of the Offer Period:

(A) this document;

(B) the memorandum and articles of association of Cadbury;

(C) the audited consolidated accounts of Cadbury Schweppes

for the financial year ended 31 December 2007 and theaudited consolidated accounts of Cadbury for the financialyear ended 31 December 2008, and the half-yearly report

of the Group for the six months ended 29 July 2009;

(D) the service agreements and letters of appointment of theDirectors referred to in paragraph 5 above;

(E) the material contracts referred to in paragraph 8 above;

(F) the letters giving the consents referred to in paragraph15 above;

(G) the reports of each of Deloitte LLP, Goldman Sachs

International, Morgan Stanley & Co. Limited and UBSLimited required under Rule 28.3 of the City Code in

relation to the Profit Forecast (set out in Appendix 2 tothis document), and the letters of each of Deloitte LLP,

Goldman Sachs International, Morgan Stanley & Co. Limitedand UBS Limited consenting to the issue of their respectivereports in the form and context in which such reports have

been included in this document;

(H) a full list of all dealings in Cadbury Shares by the CadburySchweppes Employee Trust from and including 7 September2009 until the Latest Practicable Date;

(I ) a full list of all dealings in Kraft Shares by Goldman Sachs

& Co., Goldman Sachs & Co. (as discretionary manager),Goldman Sachs Financial Markets, Goldman Sachs Bank AG(as discretionary manager) from and including 7 September

2009 until the Latest Practicable Date and a full list of theinterests of Goldman Sachs & Co. which have been

aggregated in this document; and

(J) a full list of all dealings in Kraft Shares by UBS FinancialServices Inc. from and including 7 September 2009 untilthe Latest Practicable Date;

16.2 A copy of this document is available free of charge,

subject to certain restrictions relating to persons in RestrictedJurisdictions, on Cadburys website at www.cadbury.com, andwill continue to be available for so long as the Offer remains

open for acceptances.



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Average 2008

US Dollar 1.85

Canadian Dollar 1.96

Australian Dollar 2.20

Euro 1.26

South African Rand 15.23

Mexican Peso 20.48

2.7 The Profit Forecast at actual currency has been compiled

by applying an estimate of the actual average exchange ratesfor 2009. The principal exchange rates used to translateoverseas profits into sterling are:

Estimated 2009

US Dollar 1.57

Canadian Dollar 1.78

Australian Dollar 1.99

Euro 1.12

South African Rand 13.10

Mexican Peso 21.14

2.8 The Profit Forecast has been prepared on theassumption that:

> There will be no material acquisitions or disposals ofbusinesses during the financial year ending 31 December

2009 other than those already reported.

> There will be no material change in current levels of

demand in the Groups principal markets caused by

significant changes in economic or other factors.

> There will be no major disruptions to the business ofthe Group, its suppliers or customers due to natural

disaster, terrorism, extreme weather conditions,industrial disruption, civil disturbance or government

action.

> There will be no change in legislation or regulatoryrequirements that will have a material impact on theGroups operations.

> There will be no material change in the present

management or control of the Group or its existingoperational strategy.

1. Introduction1.1 The profit forecast comprises the statements made by theCompany marked by an asterisk on pages 2, 7, 10 and 16 of theDefence Document and in the sources and bases section of

the Defence Document (the ProfitForecast) .

1.2 As the Profit Forecast constitutes a profit forecast forthe purposes of the City Code, the City Code requires that

the Profit Forecast be reported on by Cadburys reportingaccountants and financial advisers in accordance with Rule 28of the Code. The Profit Forecast is for the full year to

31 December 2009. In accordance with Rule 28.8, yourattention is drawn to the announcement issued by the

Company on 29 July 2009 containing the unaudited resultsof Cadbury for the six month period ended 30 June 2009.

2.BasesandAssumptions2.1The Profit Forecast has been prepared on a basis consistentwith the accounting policies that are expected to be used in

the Groups consolidated financial statements for the yearending 31 December 2009. These policies are consistent with

those set out on pages 90 to 98 of the Group consolidatedfinancial statements for the year ended 31 December 2008,as updated by note 1 of the Groups interim results for the six

months ended 30 June 2009.

2.2 The Profit Forecast is based on the actual results included

in the unaudited management accounts for the ten months

ended 31 October 2009 and a forecast for the two months

ending 31 December 2009.

2.3 Except where otherwise stated, all percentages and

comments on movements in revenue and margins relate to

the Groups continuing operations, are calculated using actual

currency and exclude the impact of acquisitions and disposals.

Underlying operating margin is calculated as underlying profit

from operations as a percentage of revenue. EBITDA is

calculated as underlying profit from operations adjusted to

add back depreciation of property, plant and equipment and

amortisation of software intangibles.

2.4 Except where otherwise stated, references to tradingprofit refer to underlying operating profit, and references to

trading margin and margin refer to underlying operating margin.

2.5 It is assumed that there will be no material change in the

rates of exchange, or inflation from those currently prevailing.

2.6 The Profit Forecast at constant currency has been

compiled by applying the actual average exchange rates for

2008. The principal exchange rates used to translate overseas

profits into sterling are:

appendix 2Profit forecast


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The DirectorsCadbury plc

Cadbury HouseUxbridge Business Park

Sanderson RoadUxbridgeUB8 1DH

Goldman Sachs International

Peterborough Court133 Fleet Street

LondonEC4A 2BB

Morgan Stanley & Co. Limited20 Bank Street

LondonE14 4AD

UBS Limited1 Finsbury Avenue

LondonEC2M 2PP

14 December 2009

Dear Sirs

Cadburyplc(theCompany)

We report on the profit forecast comprising the statements made by the Company marked by an asterisk on pages

2, 7, 10 and 16 and in the sources and bases section of the offeree board circular issued by the Company dated14 December 2009 (the Circular). Such profit forecast statements relate to underlying profit from operations,underlying operating margin, and underlying earnings before interest, tax, depreciation and amortisation (EBITDA)

(as defined in Note 2.3 to Appendix 2 of the Circular) (all in actual currency) and growth in underlying operatingmargin (both in actual and constant currency) of the Company and its subsidiaries (together the Group) for the

12 months ending 31 December 2009 (the ProfitForecast). The material assumptions upon which the Profit

Forecast is based are set out in Appendix 2 of the Circular. This report is required by Rule 28.3(b) of the City Codeon Takeovers and Mergers issued by The Panel on Takeovers and Mergers (the TakeoverCode) and is given for thepurpose of complying with that rule and for no other purpose. Accordingly, we assume no responsibility in respectof this report to any person who is seeking or may in the future seek to acquire control of the Company

(an Offeror) or to any other person connected to, or acting in concert with, an Offeror.

ResponsibilitiesIt is the responsibility of the directors of the Company (the Directors) to prepare the Profit Forecast in

accordance with the requirements of the Takeover Code.

It is our responsibility to form an opinion as required by the Takeover Code as to the proper compilation of theProfit Forecast and to report that opinion to you.

Deloitte LLP

Athene Place

66 Shoe Lane

London EC4A 3BQ

Tel: +44 (0) 20 7936 3000

Fax: +44 (0) 20 7583 1198

www.deloitte.co.uk


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Goldman Sachs International Morgan Stanley & Co. Limited UBS Limited

Peterborough Court 20 Bank Street 1 Finsbury Avenue133 Fleet Street London LondonLondon E14 4AD EC2M 2PP

EC4A 2BBRegistered in England and Registered in England and Registered in England and

Wales No. 2263951 Wales No. 2164628 Wales No. 2035362

Authorised and regulated by Authorised and regulated by Authorised and regulated bythe Financial Services Authority the Financial Services Authority the Financial Services Authority

To: The Board of DirectorsCadbury plcCadbury House

Uxbridge Business ParkSanderson Road

Uxbridge